EYE OPENER: Summary of Reading 34: Tricks of Free Trade

Summary

The article, "Tricks of Free Trade," is written by Mark Weisbrot. The main focus of this reading is the ongoing problem of free trade causing economic and environmental threats to mankind. The author defines free trade as "the absence of tariffs or other barriers that hinder the flow of goods and services across international boundaries." The problem is that international pacts such as the North American Free Trade Agreement (NAFTA), the General Agreement on Tariffs and Trade (GATT), the Multilateral Agreement on Investment (MAI), and the Free Trade Area of the Americans (FTAA) are bending the rules of free trade and using it as a marketing tool to sell property rights for investors and corporations. Environmentalists started becoming aware of this unethical behavior when they realized these trade deals weren't about free trade at all. 

The article goes on talking about different cases and examples of how these international pacts are affecting our environment. For example, NAFTA's biggest environmental threat revolves around a specific agreement called "Chapter 11." Under this agreement, "foreign investors may sue governments directly for regulations that cause a loss of profits." To drive this idea home, the author gave an example of a case between Canada's Methanex Corporation and the state of California. Canada's Methanex Corporation filed a Chapter 11 complaint towards the state of California because it was trying to ban a gasoline additive called MTBE. MTBE is known to be an animal/human carcinogen, which is highly soluble in water, and very expensive and difficult to clean up. California already has more than 10,000 groundwater sites that have been contaminated with MTBE. However, because of the Chapter 11 agreement, if California bans this additive, it may have to pay Canada's Methanex Corporation billions of dollars to do so.

The article also talks about the International Monetary Fund (IMF) and the World Bank. These two are easily considered the most powerful supranational bodies out of all the previous ones mentioned. The IMF is the head of a cartel (or a formal agreement among firms) of creditors. To get an idea of how powerful IMF is, the author gives the analogy: "what OPEC is to oil the IMF is to credit." According to the text,"a country that does not win the IMF's approval for its economic policy will be ineligible for most credit from the World Bank, other multilateral lenders, governments, and very often the private sector." The IMF and the World Bank are causing huge impacts on the environment because their advocacy of export-led growth is using up vast amounts of non-renewable resources in developing countries. 

Another important issue the author talks about is the population of people with HIV/AIDS. Right now in the U.S. there is medication available for patients with HIV/AIDS, called "triple therapy," that can keep people alive and relatively healthy for a long period of time. Though this medication is life-saving, it costs patients who use it $12,000 every year. Recently, however, an Indian generic-drug manufacturer named "Cipla" has come up with a generic version of "triple therapy" and has offered to sell it for as little as $350 a year. This low price could save millions of more people with HIV/AIDS who can't afford to pay $12,000 annually. Sadly, the U.S. fought with the World Trade Organization to make it illegal for generic drug manufacturers to distribute these inexpensive, life-saving drugs to other countries for the sake of all the pharmaceutical companies. This supports the notion that these powerful supranational bodies could care less about "free trade."

The author closes by stressing the importance of breaking these trade agreements that are becoming too politically powerful. On top of that, he also says the public must work together to reduce the power of IMF and the World Bank. By using the strategy of "harm reduction" we can create new policies that protect the environment and more importantly, the overall well-being of mankind.

Different View Points

"Free Trade and the Environment" - This article by Deborah James supports the article I reviewed by talking about how all the "free trade agreements" are threatening our environment. The author mentions NAFTA, WTO and other agreements that were written to prioritize rights for corporations over protections for our shared environment.

"Is Export-Led Growth Passe?" - This article is written by Dani Rodrik who talks about the export-led growth hypothesis and whether or not it should continue or not. The article I reviewed said that export-led growth is devastating the environment in developing countries by using up all the non-renewable resources available to them. In contrast, this article supports the idea of export-led growth. The main reason the author supports export-led growth is because economic growth is abundant when this method is used.

Discussion Question

The author of the article I reviewed claims that we as a people must work to make such powerful bodies, such as IMF and the World Bank, less powerful. What do you think are some ways that we can reduce the power and authority of these supranational groups?